Goods sold in many of the states have a sales tax imposed in addition to the purchase price. There are certain states that do not institute a sales tax for retail goods, however. No matter which state you purchase items in, sales tax can affect your federal tax return when you file.

States Without Sales Tax

There are five states that do not tax goods sold within their jurisdictions: Alaska, Delaware, Montana, New Hampshire, and Oregon. You can buy items there without having to be a resident. Tax-free shopping for taxpayers who itemize can be beneficial, as you can claim a state sales tax deductions. However, you’re only able to claim either the sales tax deduction or income tax payments deduction for the state. The IRS offers sales tax tables to help determine the amount of your deduction.

Itemization

When you claim deductions, you have two choices: taking the standard deduction or itemizing your actual expenses on a Schedule A. You should always opt for the larger benefit, which means you may need to calculate both methods to determine which is the better option. You need to itemize to claim the state sales tax deduction.

Optional Sales Tax Tables

Unless you live in a tax-free state and do all your shopping there, or you purposely make tax-free shopping your only method of acquiring goods, recording all your sales tax can get monotonous. Thankfully, the IRS allows taxpayers the option of estimating sales tax using optional sales tax tables.

In doing so, you’ll qualify for the amount listed by your home state, where your adjusted gross income falls, which may be increased by tax exempt income, and the number of personal and dependent exemptions you claim. This applies even if you don’t pay any sales tax throughout the year. Taxpayers in localities that add additional sales tax, such a New York City, may qualify for an even larger sales tax deduction.